CASE

Sell Co Holdings Ltd (‘Holdings’) is the parent company of a group of companies, The Sell Co Group. Recently, Holdings outsourced certain of the group's IT functions to Digital Age Services Ltd (‘Digital Age’). The contract between Holdings and Digital Age provides, inter alia, that Digital Age will provide certain IT services to the companies set out in a schedule to the contract, from 1 February 2016 until 31 January 2021; that Holdings can add to, remove or replace any company in the schedule on giving written notice to Digital Age; and that Holdings are responsible for making all payments to Digital Age. The schedule lists a number of companies in the Sell Co Group, including Sell Co Direct Ltd (‘Direct’).

Due to a breach of the contract by Digital Age, Direct suffer loss, due to lost sales, in the region of €10 million.

The directors of Holdings make clear that Holdings will not raise court proceedings against Digital Age for breach of contract.

To date, Holdings have sent notices to remove two group companies from, and add another group company to, the schedule to the contract. Direct have not been removed from the schedule.

Questions

• 1. Can Direct take action against Digital Age for breach of contract?

• 2. Would Direct be able to force Holdings to raise proceedings against Digital Age to recover Direct's losses?

In answering the above questions, assume that causation is not an issue, i.e. assume that Direct would be able to prove that the losses they have suffered are as a result of Digital Age's breach of contract.